Wisconsin Legislature: DHS 103.065(6)(a)

1. Whenever an institutionalized individual or his or her spouse, or another person acting on behalf of the institutionalized individual or his or her spouse, transfers funds on or after October 1, 1993, to an irrevocable annuity in an amount that exceeds the expected value of the benefit, the institutionalized individual or his or her spouse shall be determined to have divested.

2. The agency shall determine the amount of the divestment under subd. 1. by:

a. Determining the life expectancy of the primary annuitant or joint annuitants using the life expectancy tables included in the MA eligibility handbook. Table I shows the age at which the male or female institutionalized individual chose the settlement option for annuitization, life expectancy for an individual of that age, and estimated remaining years of life based on the age at which the institutionalized individual chose the settlement option. Table II shows the ages at which both the male and female joint annuitants chose the settlement option for annuitization, life expectancy for each individual of that individual’s age, and estimated remaining years of life based on the ages at which the joint annuitants chose this settlement option; and

b. Adding together the amount of all the payments from the irrevocable annuity scheduled to be made after the month in which the primary annuitant’s age or joint annuitants’ ages exceed the estimated remaining years of life. The divested amount is the sum of all the payments to be made from the irrevocable annuity after the month in which the primary annuitant’s age or joint annuitants’ ages exceed the estimated remaining years of life.

Note: For a copy of the life expectancy tables included in the MA eligibility handbook, write the Bureau of Health Information Policy, Division of Public Health, P.O. Box 2659, Madison, WI 53701-2659.

3. If the agency receives a physician’s statement which states that the primary annuitant or joint annuitant had a diagnosed medical condition which would shorten his or her life expectancy and that the medical condition was diagnosed before the institutionalized individual, his or her spouse, or someone acting on behalf of the institutionalized individual or his or her spouse transferred funds to an irrevocable annuity, the agency shall determine the expected value of the benefits based upon the physician’s statement instead of using a life expectancy table as provided under subd. 2.

(b) Permitted divestment to an exempt party — homestead property. Transfer of homestead property at less than fair market value is not divestment resulting in ineligibility under this section if the individual transferred title to the homestead property to:

1. The spouse of the institutionalized individual on or after October 1, 1989;

2. A child of the institutionalized individual who is under age 21 or who meets the SSI definition of total and permanent disability or blindness under 42 USC 1382c;

3. A sibling of the institutionalized individual who has an equity interest in the homestead and who was residing in the institutionalized individual’s home for at least one year immediately before the date the individual became an institutionalized individual. In this subdivision, “equity interest” means ownership interest in a homestead by one or more persons who pay or have paid all or a portion of mortgage or land contract payments, expenses for upkeep and repair or payment of real estate taxes. The institutionalized individual shall provide documentation to verify the sibling’s equity interest in the homestead; or

4. The child, other than a child described in subd. 2., of the institutionalized individual who was residing in the institutionalized individual’s home for a period of at least 2 years immediately before the date the individual became an institutionalized individual and who provided care to the institutionalized individual which permitted him or her to reside at home rather than in an SNF, ICF or medical institution which receives payment based on a level of care provided in an SNF or ICF. The institutionalized individual shall provide a notarized statement to the agency from his or her physician or another person or persons who have personal knowledge of the living circumstances of the institutionalized individual stating that the individual was able to remain in his or her home because of the care provided by the child. A notarized statement only from the child does not satisfy the requirements of this subdivision.

(c) Permitted divestment on or after August 9, 1989, but before July 1, 1990, to an exempt party — non-homestead property. For transfers that occurred on or after August 9, 1989, but before July 1, 1990, transfer of a non-homestead resource at less than fair market value is not divestment resulting in ineligibility under this section if the individual transferred the resource to one of the following individuals:

1. Beginning October 1, 1989, to the community spouse or to another individual for the sole benefit of the community spouse after the individual became an institutionalized individual;

2. To a minor or adult child of the institutionalized individual who meets the SSI definition of total and permanent disability or blindness under 42 USC 1382c; or

3. Beginning October 1, 1989, to the individual’s spouse or to another person for the sole benefit of the individual’s spouse before the individual became an institutionalized individual. Such a transfer is not considered divestment resulting in ineligibility for as long as the individual’s spouse does not transfer the resource to another person other than his or her spouse at less than fair market value. The individual’s spouse shall report any transfer of the resource to the agency within 10 days after the transfer is made as required under s. 49.455, Stats. Failure of the institutionalized individual’s spouse to report the transfer may be fraud under s. 946.91 (2) (c), Stats.

(cm) Permitted divestment on or after July 1, 1990, to an exempt party — non-homestead property. Transfer of a non-homestead resource at less than fair market value on or after July 1, 1990, is not divestment resulting in ineligibility under this section to the extent that the resource was transferred:

1. To or from the individual’s spouse or to another individual for the sole benefit of the spouse; or

2. To a minor or adult child of the institutionalized individual who meets the SSI definition of total and permanent disability or blindness under 42 USC 1382c.

(d) Circumstances under which divestment is not a barrier to eligibility. An institutionalized individual who has been determined to have made a prohibited divestment under this section shall be found ineligible for MA as defined under s. DHS 101.03 (95) unless:

1. The transfer of property occurred as the result of a division of resources as part of a divorce or separation action, the loss of a resource due to foreclosure or the repossession of a resource due to failure to meet payments; or

2. It is shown to the satisfaction of the department that one of the following occurred:

a. The individual intended to dispose of the resource either at fair market value or for other valuable consideration;

b. The resource was transferred exclusively for some purpose other than to become eligible for MA;

c. The ownership of the divested property was returned to the individual who originally disposed of it; or

d. The denial or termination of eligibility would work an undue hardship. In this subparagraph, “undue hardship” means that a serious impairment to the institutionalized individual’s immediate health status exists.

(5) Determining the period of ineligibility. An institutionalized individual who has made a prohibited divestment under this section resulting in ineligibility or whose spouse has made a divestment under this section resulting in ineligibility on or after July 1, 1990, as determined by the agency, without a condition under sub. (4) (d) existing, shall be ineligible for MA as defined in this section for, beginning with the month of divestment, the lesser of:

(a) Thirty months; or

(b) The number of months obtained by dividing the total uncompensated value of the transferred resources by the statewide average monthly cost to a private pay patient in an SNF at the time of application. In this paragraph, “total uncompensated value of the transferred resource” means the difference between the compensation received for the resource and the fair market value of the resource less any outstanding loans, mortgages or other encumbrances on the resource.

(6) Agency responsibilities.

(a) The agency shall determine if an applicant or recipient who is ineligible for MA under this section is eligible for MA card services. The applicant or recipient’s income eligibility shall be determined using the standards under s. DHS 103.04 (4).

(b) The agency shall monitor retention of assets by the non-institutionalized spouse for those transfers that occur on or after October 1, 1989, but before July 1, 1990, under sub. (4) (c) 3. at each application or review of eligibility for the institutionalized spouse.

History: Cr. Register, March, 1990, No. 412, eff. 5-1-90; am. (1), (2), (4) (a) and (c) (intro.), (5) (intro.) and (6) (b), cr. (4) (cm), Register, May, 1991, No. 425, eff. 6-1-91; am. (2), (3) (a) and (4) (a), cr. (4) (am), Register, March, 1993, No. 447, eff. 4-1-93; emerg. renum. (3) (a) to (e) to be (3) (b), (d), (f), (g) and (j), cr. (4) (at), eff. 1-1-94; renum. (3) (a) to (e) to be (3) (b), (d), (f), (g) and (j), cr. (4) (at), Register, August, 1994, No. 464, eff. 9-1-94; corrections in (2) and (4) (c) 3. made under s. 13.93 (2m) (b) 7., Stats., Register February 2002 No. 554; corrections in (3) (f), (g), (j), (4) (a) and (d) (intro.) made under s. 13.92 (4) (b) 7., Stats., Register December 2008 No. 636; correction in (4) (c) 3. made under s. 13.92 (4) (b) 7., Stats., Register July 2015 No. 715.

DHS 103.07 Income.

(1) Special situations of institutionalized persons.

(a) Support received by institutionalized persons.

1. Any financial support or contribution received by an institutionalized person shall be considered available when determining the eligibility of that person for MA.

2. The income and assets of the parents of children under age 18 who reside in institutions shall be evaluated by the department to determine whether, pursuant to s. 46.10 (14), Stats., collections may be made from one or both parents. If the child is residing in an institution not specified in s. 46.10 (14), Stats., but the institution is approved to receive MA payments, the parental liability shall be the same as that provided in s. 46.10 (14), Stats., and collected in the same manner.

3. The agency shall decide if the spouse of an institutionalized applicant or recipient should be referred for support action under s. 49.90, Stats. When deciding whether to refer for support action, the agency shall consider the spouse’s basic essential needs and present and future expenses. In no case may support from the spouse of an institutionalized applicant or recipient be pursued when the spouse’s assets, not counting homestead property and a motor vehicle, or, if applicable, not counting assets excluded under s. DHS 103.075 (5) (b) 2., are less than the amount provided under s. 49.47 (4) (b) 3g., Stats., or, if applicable, the spousal asset share under s. 49.455 (6) (b), Stats., and when the spouse’s income is less than the spousal monthly income allowance under s. 49.455 (4) (b), Stats.

(b) Allocation of institutionalized person’s income to dependents outside the institution. Except as provided under s. DHS 103.075 (6), no allocation may be made from an institutionalized applicant’s or recipient’s income to a spouse who is eligible for SSI but who refuses to obtain SSI. Except as provided under s. DHS 103.075 (6), no allocation may be made to a spouse or to minor children under the spouse’s care if the spouse or any of the children are receiving SSI. Otherwise, allocations shall be made as follows:

1. If the spouse is caring for a minor child for whom either the institutionalized person or the spouse is legally responsible, the AFDC assistance standard as specified in s. 49.19 (11) (am) 1m., Stats., plus expenses that would be allowed under s. DHS 103.04 (3) shall be used to determine the need of the spouse and children. If their total net income is less than their need, income of the institutionalized person shall be allocated in an amount sufficient to bring the spouse’s and children’s income up to their monthly need. In this subdivision, “total net income” means income equal to unearned income plus earned income.

2. If the spouse is not caring for a minor child, the SSI payment level for one person living in that person’s own household shall be used to determine the spouse’s monthly need. The spouse’s earned income shall be netted by subtracting the work-related expenses according to sub. (3) and $20. from earned or unearned income or both. If the spouse’s net income is less than the spouse’s monthly need, income of the institutionalized person may be allocated in an amount sufficient to bring the spouse’s income up to monthly need. Income disregards of the SSI program under 20 CFR 416.1112 and 416.1124 shall be used as appropriate in computing income.

3. The following amounts shall be excluded when computing the income of the spouse and children under subd. 1. or the spouse alone under subd. 2.:

a. All earnings of a child less than 14 years old, or less than 18 years old when the child is a full-time student;

b. All earnings of a child less than 18 years old who attends school part-time and is employed fewer than 30 hours a week;

c. Any portion of any grant, scholarship or fellowship used to pay the costs of tuition, fees, books and transportation to and from classes;

d. Amounts received for foster care or subsidized adoption;

e. The bonus value of food stamps and the value of foods donated by the federal department of agriculture;

f. Home produce grown for personal consumption; and

g. Income actually set aside for the post-high school education of a child who is a junior or senior in high school.

(c) When both spouses are institutionalized and there is an application for MA. When both spouses are institutionalized, the following shall apply:

1. If one spouse applies for MA, the total income of both spouses may be combined to ascertain if their combined income is less than total need, provided that the spouse not applying has income exceeding that spouse’s needs and is willing to make that income available;

2. If the combined income of both spouses is less than total need, separate determinations shall be made to see if either spouse has excess income. Any excess may be allocated to the other spouse. Either one or both of the spouses may be eligible depending on income allocation; and

3. If the combined income of both spouses exceeds total need, separate determinations shall be made. Only the actual amount of income made available from one spouse to the other may be used in determining the eligibility of the other spouse. If the spouse refuses to make a reasonable amount available, the agency shall review the case under par. (a) 3. to determine if legal action for support should be taken pursuant to s. 49.90, Stats.

(d) Computing income available towards cost of care. Institutionalized recipients of MA who are determined eligible under s. DHS 103.06 and this section shall apply their available income toward the cost of their care after deducting the income disregards in this paragraph. In this paragraph, “available income” means any remaining income after the following reductions are made:

1. A personal needs allowance, as provided under s. 49.45 (7) (a), Stats., and

2. If employed, the first $65 and one-half of the remainder of gross earnings;

3. The cost of health insurance;

4. Necessary medical or remedial care recognized under state law but not covered by MA;

5. The actual amount paid by the institutionalized person for support of a person for whom the institutionalized person is legally responsible but not to exceed the appropriate AFDC assistance standard unless the institutionalized person is paying court-ordered support in an amount greater than the AFDC assistance standard in s. 49.19 (11) (am) 1m., Stats.; and

6. The monthly cost of maintaining a home when the conditions of s. DHS 103.06 (1) (b) 3. are met, but not to exceed the SSI payment level for one person living in that person’s own household.

(2) Special types of income.

(a) Farm and self-employment income. Farm and self-employment income used in MA calculations shall be determined by adding back into the net earnings the following: depreciation, personal business and entertainment expenses, personal transportation, purchases of capital equipment, and payments on the principal of loans. The total shall be divided by 12 to get monthly earnings. If no tax return has been filed, the individual shall complete a 1040 form of the internal revenue service (IRS) to determine net earnings or loss, or to anticipate, in case of relatively new businesses, net earnings as required by the IRS. If the latest income tax return does not accurately reflect the household’s actual circumstances because the household has experienced a substantial increase or decrease in business, the agency shall calculate the self-employment income based on anticipated earnings. Agencies shall determine whether it is necessary to use anticipated earnings on a case-by-case basis and shall document the reasons for the determination in the case record.

(b) Contractual employment income. Income received on other than an hourly or piecework basis from employment performed under a contract which is renewable on an annual basis shall be averaged over a 12-month period. Persons receiving this income shall be considered to receive compensation for the entire 12-month period even though actual compensation may only be received for part of the year.

Note: For example, if school teachers are paid 9 months a year, the wages they receive are to be averaged over a 12-month period.

(c) In-kind benefits. Predictable in-kind benefits received regularly and in return for a service or product delivered shall be treated as earned income in MA calculations. The value of the in-kind income is determined by using the prevailing wage rate in the local community for the type of work performed, but not less than the minimum wage for that type of work.

(d) Income from providing room and board. Net profit from room and board shall be treated as earned income in MA calculations. Net profit is determined by deducting the following expenses of providing room and board from the gross room and board income received:

1. Roomer only - $15.00;

2. Boarder only - current food stamp allotment for one; and

3. Roomer and boarder - current food stamp allotment for one plus $15.00.

(e) Income from rentals. When the owner reports rental income to the IRS as self-employment income, the procedures set forth in par. (a) shall be followed in MA calculations. If the owner does not report rental income to the IRS as self-employment income, net rental income shall be determined as follows:

1. When the owner is not an occupant, net rental income is the rental income minus the mortgage payment and verifiable operational costs;

2. When the owner receives rental income from a duplex or multiple rental unit building and the owner resides in one of the units, net rental income shall be computed according to the following method:

a. Add the interest portion of the mortgage and other verifiable operational costs common to the entire operation;

b. Multiply the number of rental units by the total in subd. 2. a.;

c. Divide the result in subd. 2. b. by the total number of units;

d. Add the result in subd. 2. c. to any operational costs paid by the owner that are unique to any rental unit; and

e. Subtract the result in subd. 2. d. from the total rent payments. The result is net rental income.

(f) Income of SSI child’s parents. Income of a disabled child’s parents shall not be considered when determining the child’s eligibility for MA if the child meets the conditions stated in 42 USC 1396a (e) (3).

(g) Income disregards. Income disregards of the SSI program under 20 CFR 416.1112 and 416.1124 shall be used as appropriate.

(h) Income from land contracts. Income received from a land contract shall be counted as unearned income. If the income is received on a monthly basis, it shall be included as monthly income. Payments received on less than a monthly basis shall be prorated to a monthly amount over the period between payments. Any expenses that the applicant or recipient is required to pay under the terms of the land contract shall be deducted from the gross income received from the land contract.

(i) Interest income.

1. Interest income shall be counted as unearned income when:

a. It is received on a regular basis; and

b. It exceeds $20.00 per month. Amounts of $20.00 or less are considered inconsequential income and are disregarded.

2. The interest shall be counted as income in the month in which it is received. Interest income that is received less often than monthly shall be prorated over the period the payment covers.

(3) Deductions from earned income.

(a) Work-related deduction. If an individual is employed, $90 shall be deducted from the individual’s earned income when determining MA eligibility.

(b) Dependent care deductions. When employment cannot be maintained without dependent care for a child or incapacitated adult in the MA or fiscal test group, the following deductions shall be applied:

1. The actual cost of care but not more than $175 each month for each dependent child age 2 or over or incapacitated adult; and